FEATURES OF AN ISLAND ECONOMY: MALTA 1800-1914

Arthur G. Clare

The economic history of Malta in the 19th century,particularly in the ·first half of the century, is a case-study in economic backWl<;lrdness. Industrial activity was low; the main form or employment was agricult.ural, and exter­nal commerce fared badly except in times of war. In addition, the monetary system lacked uniformity. and fiscal measures were regressive in that they proved to be inimical to economic welfare. But the first decades of the cen­tury also represented an era of transition in Maltese affairs, and like every other transitional period in a nation's history it was perforce difficult and un­certain. The very first years were politically unsettling: towards the end of the 18th century there bad been la short-lived French occupation of the island. an event that had begun by raising Maltese expectations, but which had ended disastrously for the invaders. Then there was a time when the return of the old rule of the Knights was not merely possible but also very probable. How­ever, the years following the :t1ailure of the Peace of Amiens in 1802 heralded the dawn of a new era for the Maltese. Then came the fruition of a new politi­cal permanence: a defensive arrangement between Malta and the British Crown. In return for protection of Maltese territory, Britain had control of Malta's harbours and sea Ian~s in the cause of imperial defence. British protection, however, soon took the form of direct rule, and this caused M~lta to lose her former status: ·once the 'Capital of Christian Pir,acy' now.1a mere colony. But MI:!oIta of the Knights was an anachronism in the 19th century, and new condi~ tions prescribed a new form of government which was unlike that of the old re~me. Tntiact, what the British brought to the island was a totally new poli­tical and economic relationship between the rulers and the ruled. And this the Maltese had to learn anew.

A characteristic feature of British economic thought at the time was its undue emphasis on individual enterprise. The system contemplated a wide framework within which the individual could operate, but it left little room for state economic action. Indeed, as time passed, the policies of the local British administration . moved more :and more in faithful accord with the economic tenets of 'l!aissez-faire'. And this in a Maltese context meant three things: first, that the Maltese individual had to seek out his own economic salvation; se­cond, that the Maltese nation as a whole should not expect heavy financial commitments from British sources except by way of defence spending; third, that the island had to survive on its own taxes. While this state of affairs might have had some measure of success in a country endowed with rich re-

236 ARTHUR G. (LARE

sources in terms of both men and materials, jnM~lta~s case it;~t~ded ecO­nomic growth.

Maltla's rarber primitive economy was'opEHi" in tl\at itdepeMecr almost exclusively on foreign trade as the main detemlmnt 6tfll0lh-agrieultunal"em­ployment. But foreign trade in the Mediterranean was unstable and subject to a variety of influences mlany of whioh lay outside tlw~onQDli~,,&¥stena.. Moreover, competition in the transit and carrying tra'dewas 'ii:iC'ense:' "THfs, coupled with Malta's inabrIity to widerr its industrial structure ooe to a dire lack of essential raw lllIaterials and to an inadequate capitalist development, ~clQhn~d' '~'bIe'akee'enomieiltitur'e.. 'FhewV\<8.s' )n@~ 'indUs1lFFiJPriW61lrtt.en in ·~~;imd ~~w~;mr: unlleaJt1:lyi disregar~:fmt,tFie"bettE!fit!!¥ 'O,IJp 5et~ ee~ nomielYa;se: 'In times, of)economiC_'diffieulties,lth:eref6tie,welfl:'tr~ ~rid'enl. ew pfutfemeal adlhiriiS1:l'trtivemEi9:.sares designee m~)r ~'Ml~~ ~1'e9Rmt!iol'lS' O:~ltfoM<'hati tlW;'V~,' pdOF."Tl1'e i ~ftBtfe~1~ m.i~sK ;inl1~ ~liM'SImrentg ~~1h11etl!~idl:rei:lt i'li'H.rg~ ftiff#lgcFmV#'ErU_1"m tth~&_ttiUtei!JI aetora;. rng t:Odt#leh:e;e ne~s:liisin:~~itl~tim,e&:;Cil'Fl~idiit ii\l€l rdll_fi:1¥:fim:es Sf'I'eaee: "PJrereJw~ilftts.ta z~Niiitt'l~5~ememt.iIi.it~{i:~tlsfiiei\1r~ttm:e; land! aslfliek it! dftt rtt>t g~nemtefis1:iffi~~i'liieem.~t~ilili . . iiici1.fa.ooiEIem "1!l1ru! ~~ "~Mh@(bife1(:jP"fhe;'C'1¥fefi~! , . ~et~ 111*. ~ldeeaaeS:,,~"'VtlIe*'lcefttRi¥r!t,;xf!:CiveP1·!f~ ifaif~l11iWti~"¥edrweinll'e system eEhU~)ttentftfMFetrffi:tllts. r@ltief ~efeciWtf; .', , .. " . il\e'. a:wmuR~&' i~ue-;~'~wr(f'D&~sWiI f:(/jtitFK~;~~e:wtJ",;p . ~bY'tlle' very ~~~aiid;;tri¥aei·1+fii61T W:?fS;jM1e"isllm.~JUte-DIYow:illg(~ ~ 1!his lirit was ~ceeded tlie'repereuSSioliis' w~f~' Wfde*} iJil'~

:ft(&g~'~' t1irdp'em¥ :sl'4rfEfiiras;'M"dfmP'm.,we1fir'sY'!l\ilWftff !tlte· 'IfJiWp cetmtl'y e~i6f('ed(hl!f~Pre"~tdtT.lJSit'lp edOfJOOi¥eT ril!a~oW~,~~l!m1¥inEJ.' ~emedy; .. ,pe1.frea(}t'6fbefljfi'i\cf:1tnilt~ ;l'~'S'ii"Uaiti~ iwa§ta.aii!t~~ ~ irefuctan£e. fA ldcaPeapftaFsts: 'to' ~~ie;new'~a~ftnesY(Jfb oosm¥~'§.~j~er{lifiuifiWgr industtri&l se'etott'eCJtton, 'was' iitefflcitmf,l!f)1Ufif !w2t~~:AIq~s~~:fOdtttfaIWW owfWftitl'r ~ ~cms'·~eVel'l.terlmM¥ Ct%'lal~<."ij'@.tf,~ 'mi§liWfa$t~'iir~edl sA! 'M bt!t{et:jgi evru'erreed'Sy'1!He' 6Jik{jfifaf1;'H;~Piar;.'1lMftFfelileV,plfi(l~&:)0iii~ep€ilat ~~f.)Anal it\tOak;som~·~~ltir ;'!iJ.~t(5I'f"~def~~ofqA~idivi~ if'pMd 'ift; Hie ,tong ran. 1?He 0utery"tMfm:~sM~lI~~~1l ::1f~;s~d$ ~ to tariff reform and free trade, land in their seall'<!1'fil£fihil~t~ ~s ':Mklt'ese cifPlraflstif avmedkeijn'l!Ple£'tmMll"d l,f(i~;;a,~~8iP; 'qew}op­meirt. 'OPcimrse; '~e" laCK' m;';c~i'l~tI'l~;fNiw,~tms_~a&nmjOi!t~tgi;in­dti!:;~. ~ehne~1!;~ntPis~~he{liil'a~fHri~hrsiwatfrd"/I~;lin~€§ Ii .1:irtI41~~e-j~t' iFi'1I~ ~tkt~mPI Nt1tl~tenei'~ ~~rniat~ra~. ~WlfS'VerY cheaP; fer :i~tlJ&ei;~:rRJ':Bfi~ capital ildn@Iih~~'~ avai:fIafiI@l.':M:t'ireoVer, ;6tHer:~~;dEitj!tMr~UC'e'rgj rWfa1bfY ilt ~ lian 'n~Yi!tracfvance'& l'areFtoa'gh ffo; ~elhFoompee,it\:l17S m;,0~_.r~ Kets:~rit.rsfr eompe&'f~ori:; .ahd :fOfI~gn!(ttfmfg wepe$mu~fl' mfire sm-i~,t~

F.'; :H. n Le'e';' lflaJ.i:J J HJ1J-~<!Jf14}P S~tdlyi in ;!(toliS'6ib~ltilYiBal! ami. Sit'flkkgiG: iDe.W&1hpimit.t ;i·~illa.ili;a.,; 1 ~/ {p.; WI

FEATURES OF AN ISLAND ECONOMY 237

but notwithstanding these Maltese cotton goods had gained a foothold in Europe, the Eastern Mediterranean and North Africa. 2 In short, the 10001 in­dustry had a potential for expanding on modern lines, even perhaps for initiat­ing an industrial revolution, but the extent of this potential rests with future researches to uncover.

In the first fifty years of our period, most of the lower ranks of society tried to make a living from agriculture. But land was saturated with labour, and, inevitably, rural earnings were very low. Conditions in towns were only slightly better, and times of prosperity were interspersed with times of gloom. Overpopulation characterised the economy, and when employment opportu­nities did pre$ent themselves they were transitory. At this time, perhaps more than at any other time in Malta's history, the lack of resources began to bear heavily on the population, and it was now that the most venturesome began to look beyond Malta's shores for their livelihood. To contemporaries it be­came clear that the old, glorious Malta of the Knights, when privateering and Mediterranean trade had served Maltese interests well, had vanished. But with· this realisation came the belief that good government embraced aU the aspects of social and economic life of the subjects. For this reason, the aloof­ness of the administration perplexed contemporaries. Moreover, the two-Her government, at VallettJa and London, was less intelligibIe to the Maltese, and definitely more remote, than the home-based administration of the Order. De­cisions affecting an entire nation were seen to be taken by a narrow clique cut off from the mainstream of Maltese life. And many times these decisions meant the subordination of local interests to the expediency of the British Crown.

Although the Maltese were left out of all important political issues affect­ing their land, the discontent that flourished in the first decades of British rule sprang from economic causes rather than political ones. These years saw Maltla in the throes of a prolonged economic depression occasioned by the abrupt ending of a commercial boom whiCh had endured, for reasons that will be discussed later on, from about 1807 to 1813. An uplift appears to have come only in the late twenties but even them permanent prosperity was still a long way off. Thus, in the intervening period the Maltese faced severe hardships, having had their first taste perhaps of what it was like to be poor in an individualistic age.

Our main interest in the economic fluctuations of the time stems from the question of whether it lay in Britain's power to altertht: course of events. Contemporaries seemed to believe so. In fact, they alleged that the Knights had done much to stabilise economic conditions and to bring about economic welfare, implying that the government of the Order had intervened directly to stimulate the economic life of the subjects. Of course, in times of econo­mic difficulties it was easy to gloss over the l'hortcomings of the Order's rule in order to emphasise current British deficiendes, but there is evidence to sug-

2. R. Montgomery-Martin, History of the British Colionies (1835), V, p.217.

238 ARTHUR G~ GLARE

gestthat Malta had experienced a degree of prosperity under. the Kn,lghts. It seems thattheis~and had reached a peak of affluence as a tl'ansitdepot for French goods in the heart of the Mediterranean in the late 18th century.3 AI­thciughquantitative material relating to incomes and the c!tstriputionoi.wealth is Hmited, impressionisic evidence points towards u. rll;ling prosperity even before this time. The Kllights, it seems~ had paved the wayfor eco:Qomicexpan­. Sion,' having provided employment in the war industries, attracted, an entrepot trade to 'the island's harbours, and developed agriculture 4 Theyaiso .encour­aged::local manui1actures py protective rn,easures, alld stimulated mar~t:me ac­tivities by indulging in 90th privateerirJ,g and legitimate trade. in addition, 'they brought to the island, Via their property abroad, additional foreignincome which could he used for basic imports. Of course,ocaasional food shortages, wars; arid plague did play havoc with. Maltese economic life. at times,but there were manycoinpensatIons. More important there seems to have been a 1'es­·ponsible· govermnent, mercantilist. in outlook: and expansionist. In thesecir­cumstances; population grew but living standards were maintained, so that the Maltese' 011 the whole fated better than some of their Mediterraneal1 neigh­boutsrlid.lt i.s understandable, therefore that the picture whichcontempor­aries'drewof the old Malta'was one of economic advancement, and. this co.l}­trasted' sharply with their view of conditions in the first decades of· British rule. I.:.etusnow review these condit-ions... .

. Historians 'agree thatthe first thir~eeI1 years of British rule were prosper­onsaries for Ma!tla: Defence requirem~ntsin the very firstYj:lars.provided em­ployment to a section of the labour force which had' previously served in the ~aval workshops of the Order. Thus, the first to .benefit directly from the Bri­tish'conriection were the skilled craftsmen: shipwrights, oaulkers, coopers, painters, sailmakers, and smiths. In the naval yards there was !also a demand for ropemakers, masons, labourers, bakers and .derks, In addition, local per­sonnel enlisted in the army :and served onif;lritish ships. The arrivaloftroops on the island meant more' mouths to feed and thi;s acted to theadvl3.l1tageof the local agricultural community. Furthermore, the spending of the services On the island encouraged both internal and external commerce, so that grad­uallyall sectors began to partake of this newly~found wealth.,ButrealprQ!i­peritybegarr sometime after 1806. The foundation of this pro;speritystemmed from the imposition by Napoleon. of the.Continentlal System which involved the transfer of British commerce from Ita.lian ports to Malta, thereby ,making the Malta route the main artery of supply of British contraband"goodsinto ~Eur6pe. The strategic position of the island soon became vitial to the British atte111ptto'maintai1'l their important commercial links with the Italian states during theW-at years, and this inves ted Malta ,v:i th a greatcommerciaLsignifi­ctmce. Da-yy tells us that Malta "had become .not only the, entrepot of British

3. J. Godechot, Histoire de Malte (Paris, 1870), p.57.

4. B. Blonet, The Story oj Malta (1967), p.145.

FEATURrES. OF AN ISLAND EOONOMY 239

cornrnrrce,jn the Mediterranean, but also for the. greater part of Europe". 5 .. ' Tl}e c{)1umercial boom which this situation produced appears to have beEm

lllarkeq by. considerable commercial investment, 6 though there appears to h,ave, b~e.n little .investment in industry other than perhaps ship-building. The "~Flyto weaJth,~t,seems,wasonly·· thwugh trade in fe-exports, carrying and s<?ntraband traffic. But there were other opportunities: in 1809 the Banco Angl()~M~ltese:was setup and three years later the Banco diilVIalta. The growth of traffic and invisible earnings necessari'lycontributed substantially to ,Jhe wealth of··Malta;s .commercialcommunity and had a direct influence o.:t:l.t11e development of commercial services, including marine insurance, in ge1;}erill. Traffic also extended the range of foreign· commercial contacts. Ves­sels .. plying the. Mediternmean were calling dailyat Valletta harbour. In 1801, the; nU:glber pfBritish ships stopping in Malta v.tas 291; ten years later the ~gu~dpu.bledJ while the .total number of arrivals in 1812 rose to around 3,000 ~ltips, In the me'antim6, the .number of Malta-registered ships swelled from )65in 1803 to 8~O iI:l1811.7 All this indicates the extent of commercial activi­.tyjnand around. ports, a situation which benefited an classes of society. In-4eed,su,~11 was thedemEtndfor labour that vViages were rising faster than food prices-, at thJs time. Moreover, the increased demand for food which the in­Jlu.e'.6fforeign merchants and troops engendered ensured the Iivelihood of the farming community by raising farm incomes. There was talso a land bo()m, for. rents, went up;in both rural and urban areas. Land, it seems, was earn­.in~l.. it hig~ prep:1ium. eyeryWhere. . Until 1813 the favoqrable conditions in commerce had guaranteed the In,comes qfalarge part of the labour force in civilian occupations. The only sOl1r:, note was.soupded by the industrial sector, cotton, whose chief foreign market, 6atalonia, had been closed by order of the Spanish authorities in ISOO., Furthermore, it was during this time. that British cottons were beginning to thr~aten lOFalproducts: Booming conoitions in ,agrcultur6,from which cot­tol,1,.mltworkers. were drawn, were then providing the sector withsupplemen-

. tarye~rnings,.apdsothe damage being done to loca,lcotton production was temp,orariiy .. ,qbscured. Cotton growers got· round the difficulty by devoting lE~~s. acreage's. to. cotton and more to wheat. Nevertheless, the real problems o(~th~ ip:!iustry .,..... 'lack of oapitaland technological improvements - were l1eg~eci.eid .. qottol1,l:leing:a major growth commodity, could perhaps have con-

,.trib),lted substantially to Malta's external balance by way of visible earnings had production been intensified and carried out in mills . during this phase Qf,capiial.1;lcpumulation.The fact that the industry continued to linger on .\:yell il1tothiei·se~.ondhalf of the century, despite its technical shortcomings, seems to ,indicate, t.he feasibility of factory production. Certainly,' overseas ,. ,.,', ... ' , ~ .' :,'

. J,,:p.i!A'y,.Notes qnd:Ob~erva.tidns on the Ion~a.jt Isl'arnds:a1~d Malta; (1842), 1, pAZ. 6. H. Bowen-Jones, J.C. Dewdney, \V,B. Fisher, Malta.: Background for Development

(1961), p.1n 7. Memo on Maltese Commerce, CO. 158/19,

240 ARTHUR; G. CLARE

markets were still providing an outlet for local goods, even though many of these were ,protected. As for the liack of coal and the cost of imported fuel, Maltese producers would have been in no worse position than textile manu­facturers in, say, Catalonia where a cotton industry had grown despite a l~k of essential l'IaW materials. The greatest economic drawback of the boom was that it diverted funds away from industrial development. It was thus a re­tarding factor which blinded men from the rea! need to diversify an economy which had remained virtuaUy unchanged.

But the boom could not last for ever. In 1813, a plague hit the island with such severity that its commercial life came to a standstill. Henceforth all ships leaving. the island were suspected of harbouring infection. Merchants were scared away; many would never return. The final biowcame when, at the end of the war,British merchants re-established their old bases on the con­tinent. From then onwards the precariousness of the economic situation in Malta came to the fore. As commercial activity took a downward trend, un­employment rose and pauperism spread. The illusory basis of the commercial boom and the fact that Malta was a transit depot of wartime convenience only became painfully clear. But the idea that the island could not really com· pete JaS a peace-time European entre pot died hard. And this was to bedevil relations between the mercantile community and the administrators for a long time.

With foreign capital much diminished, incomes fell. The worst years, it would appear, were those between 1813 and the mid-twenties. There were some gains in that real wages of the working classes rose after 1817, but gains in this direction were offset l)y the faU in employment. The figures we have for food prices and money wages in this period are far from satisfactory, but we can discern a clear trend. For instance, money wages paid to artisans employed by the public works departments during 1815 to 1825 show a con­tinuous downward trehd, reflecting the falling demand fOr labour at till! time. S Figures in other sOurces also tell the same story. They show Ii rise in wages during the period 1806 to 1813, a slight fall in 1815, and a drop in the early twenties. 'J1helllost to suffer were the unskilled. A farm labourer's wage, for' instance, was Is. 6d.per day in the booming war years; inthe ensuing years it fell to about one-third of that figure 9 Skilled workers were more fortunate. Their services were in demand at the naval yards and their earn­ings were thus safeguarded. A table of money· wages for certain classes of workers is given below:

In the meantime, however, food prices fell and this mitigated the hard­ship caused by the fall in wages. According to one source, prices of essential foodstuffs such as fruit and vegetables feU by 60% between 1818 and 1824, whiIe meat in the early twenties fetched one-third of its price in 1810. 10 Un­fortunately, this source fails to give exact figures and so an allowance has

8. Wages Pa'id to A.rtificers in Lamd Revetnue Departmen.t, C.O. 158/36. 9. Davy, op.ci.t" p,416.

FEATURES OF AN ISLAND ECONOMY

Table 1. Representative Daily Wages of Maltese Workers, 1800 to 1840

1800~ 1~13 1815 1820 Farm labourer Bid. 9d.-1Sd. 12d. 8id. TOwn labourer 61d. 9d.-lOd. 12<1. 81d. Skilled Worker 2s.-3/4d. Semi-skilled Is.8d

Source; BlueBooks and figures in Price, Da.vy and Chesney. Figures <lipprox.

241

1822-40 6!d.-81d. 6ld.-8Id.

48.3d. 2s.1d.

to be made for possible error or exaggeration. Moreover, a faU in the price of an item such as meat would only show the gains accruing to the middle classes, the real consumers of the good, A more satisfactory insight is given bypri~s of grain, which was a staple food item of the labouring class. Evi­dence suggests that grain prices fell from 1817 to the early twenties, after having been .at a high level between 1810 and 1817:

TABLE 2. Average Cost and Sale Prices cf Grain scld to the Public 1781.1821 'erlod 1781-1790 1791-1798 1801-1813 1814,1821

Average Cost Price £2.00s.0d pet salme £2.06.Od

£2.1&.ld. £2.05s.Od.

Average Sale Price £2.08s.0d per salme m.ISs.Od

£3.03s.Sd £3.00s.0d

"

" Soutte: Statemeht en Grain Prices, e.o, 158/113. Prices (approx.) have been converted intO' sterling calculated at 25 per scudo between 1781 and 1798, and a2Od. between 1801 to' 1821. 1 salme: 98.5 % imperial quarter.

The period also Witnessed offsetting movements in real wages: from a peak in 1808 they fell to a low in 1817; thereafter money wages stabilised while food prices ingene1'1al fell. This trend· was reversed from the fifties on­wards.

Despite these developments the over ... alI picture during the years 1815 to the mid-twenties remained gloomy. The carrying and transit trades were in decline and this affected the employment of a large section of the labour fotce. It must also have created balance-of-payments problems, for Maltese entrepot was a major foreign income earner. Another 'large sector which exe

perienced difficulties was agriculture. Having expanded the acreage necessary for more wheat production during the boom, ilarmers ,after 1815 were faced with imports of foreign grain whioh interfered with their earnings. Until 1821, grain imports were purchased by the Government, so that the Internal trade in . grain was a government monopoly. In 1822 this trade was opened to private deale1"s With the· result that competition forced down the price of the commodity, even though a tax was imposed upon it. In these circwnstances. depressed wheat farmers turned to cotton groWing to gain some relief, but even here imports Of the foreign commodity, this time from Egypt, created further difficulties.

to. Greig to' Thornton 24/4/1824, C.O. 15-8/36.

A contributing factor to the decline of Malta's' external trade' seerils to have beel1L1:l:t~ quarantine 'regulations in force after"the plagu!'{'<Sf 1813. Many ve~~ se1s<,;,by"passed M~Itese harbours because he'alth regulatIons ihwlVed"ibO manYd~ays and .r~strictions. In 'addition, dtl'es 'were high' and this'tehd-ered Ma~t/i less attractive than other Mediterranean ports. But iperhaps"tlie'''gr~t~~t dra'W'~k was that goods cOming from Malta were kepfin' quarantine' in fdr~ eign ports. This acted to the, disadvantage'ofboth the"carTying and transit trade; restrictions were raised only after the mid-twentieS 'but great d~ge w~s'J:f(}neJi:Q.ithe·meantime"li ,. ,":, '-,:.1' }~.' .;"\~;

','~e~e V\1eremany,in;Malta at this, time who regarded'!th~'Gov~rnmeht:~ polje;ie!) i as: 'Jjeirtgto@Jpass.ive;They" e:itpected'offlcilil interventldnJii matters of I~ade., !B'lit~\sucha:jstep' oili ithe- 'Part· of the' g6vernm:enfwoulCf tiive'rilea:rit th~ thetnega~ionof i!1di:mduldis,m,': the antithesis 6f~ 'oberighedfprlrl~iple 'tdw'btcb, many of the British aClminisliatofs!subS:6fioe'd. illRis Isignificitht thatevert'mCh matters as the supply of water to the cities were still in 1814 being :r~ar4e~ as itenrs'~tlf f plivatet!enterprls'e rather" than ofl pubIit'texpet1'se. i PThe "ooiitrine &fi';ielf"'1tel~",wa~ as yet unassai.la:bI~:lJ,Te'Vertlfele§!;;i!l, there were EnglisiiJ¥~R wlroofeU thattthe island deserved befitefr attentidi1'; 'in. the words of one'stich Englishman: ''Ma'lta has been too muoh €onsidElr~(f'a:s la garrison or nti~aist~:: tion insteaEIJ o1, a~lcentral depot for our merchandl~e!t~ 12 :

But the ~trufb is that the local administr~tibH: ~'ebuld do little to ~ttr~bt trade~ 'Admittedly, had dues"oee'ri 'abolished and tfre'e tfadettried:) tihe 'slfuiiltion :Iili~ht Have improved,albeit at'tneexP'ense of revenue:JBut ,the"/:frux oftlle 'pro­blem was not free' trade but tlie'fact tliat;cbntittenta:li'port1s h~a grM:ter adviri­tageSloNer Malta: 'In other' lW'Or,dS"!'Malta!h~'d'iiormhlabf~reb1fi~itois.' In the rich MeoiM·rraneantrade cheapiriess'm:attefed l:ti!tfe:(lwJ1.aft idUt>'matter ,a;"great 'deal W'ere"'directrlinka'g'eshw'ith 7prinnijj'a~ 1!;'\li.to~ean!fT1de~'~r6\ites!) Alid' this 'is ""WaI other ports had to offer. Tr,aders onerating· from such ,port!': as Leg'ftorn{ Naples: Trie8'te1 IMal'SeiIJes!atid, 'Bdh~e1(jtia. "imon~; '()'tlf~rs\ "1tad~E{'wnole llrnter­llind,'t(')'-'sU15pl!V1 '!MfliTlt'ets W~re' ci(:5se,'iati ,lIllnlt !ai'ld;trM~! iwa'S\moti!Hfitect~ ~ Tft tlfe telliflve Iv' unttoubJed"tim~!f df lhf\-'Hltl1" 1eEtfttlu~; t ~e¥f\'nri'\idfee~~i "~W'ei'eL'fib long~~,-a'b'0mniOft!fu:Mace- afHI{lWh~h{"S~~(w~tfl"fastefv!itid')safet;'direCt fra"de begait)1rh'lJb~ tJrefetied'to{ndirect \1lt~~, 'ffflwa:~ re:s§ttme~i6fisuming' and'pt.()~ nlt:a~~''a:~!in6ne:''¥a~id 'furn€5vet:''MTe's~t!fI'gve-l'tjb1\reri:ts;<; iriol'e:ctTVin· iii1yd11ng'~IB:e, fe·'!f(!fered"'faIsethe idea that' Mattii'Jcduld1.be'edm~' a "gfeaf"j)eac'e:.tilne 'erittepot c~n'Uel.ir:" , ", '11, hi,

• I, {"Inl tiMe's br faUi¥lg incomes:f;BNti!sR~rSimbl'iy;appeared'aU the mote ''if~ irig. ~Stnn-genf'j')01ides bh:' 'tne~;Pai'tl of ',tlfel'Bfiffsl:l:!Treasnry-;-,tfed' 'l:heharrd .6f tHe Itict¥l"lii1miHistraWrsW'itfi tlt~; ¥esu'Jt;:rtnltl(~utllW w6~s i 'spendirig'Was'k'ept d6Wfl'tfrltirthe late'forties; ,But ;th'e"f6W'tif~~r6f: exoeritlitttfE! ats6ref~~ted:''fl1e inabihty" of'1f11e 'Goverhmt'liit·· to' ifforE¥as.e'itslmenue Yietct du€ 'foreiMeel;t tr.adEnihd'ifta'de wa!; lfurtherhandit1dWed'lfy' the 'feltictahce< of Btitaih tt)' extend

<.-,f 'l,::"·1"tf.,Of,

11. Minute on Despatches 19/2/1841, c,o. 158/119, 12. Montgomery-Martin, op. cit" p.29l;; "',;- , r' ,

FEATURiES OF AN ISLAND EiOONOMY 243

to Malteseshippers privileges which other colonies enjoyed under the Naviga­tion Acts. These Acts gave preference to ships carrying the British flag and a1s'0 confi.!ledthe trade of the colonies to the. mother country. Maltese shipping, bef6tethe mid-twenties, was excluded from this preferentilalsystem. and Was preve:i,ltedfrom engaging in: direct trade with other colonies: That Malta might have benefited.through direct trade was realised as ear.Jyas 1814 when local merchants petitioned the Government for the opening of colonial trade, 'partI­cularly that with the. West Indies. which would have involved the export of loqaI goods and the re-export of European products from Valletta.. But this a:I~rmed merchants in EpgIand who had a monopoly over West Indiian trade, aild . .the locat petition could not be met insofar as it involved the re-export Of EurQpean goods. 13 Free trade was further suppressed when both imports and e:!q')orts were burdened with duties of 1~/ and JOfr,resnectively. Five years tater. in .1819,. the exoort duty wa'labolished. but the duty on imports was re­tained, though drawbacks were allowed on. re-exported articles hi 1824. That same.year goods were :admitted in bond, but the charges were adiudged to be high by local merchants. The latter <;liso voiced the cOITmlaint that government warehouses were unsuitable fordisplayinv, goods; 14 Their demand for there~ mov-alai' aU obstacles to trade was a clear manifestation that a1J.was notweU with Maltese trade.

'In tbeabsence of tradengtlres, it is impossible to ascertain the extent Of the decline. We can only sllrmisethat for ,a'time laftertheerid of the Napo­leonic War trading fl,ctivity dropped to a low love1.The transit tyjade was per­hapsmorebuoy;ant than the carrying trade, especially that of grain, . but, compared to what their fortunes must have 'been in the booming war yeats when Maltese shipping plied the Mediterranean alongside British shipping. the two 'activities suffered a dramatic oownturn. From the mid-twenties6n~ wards, however, the situat.ion seems to have changed for the better. Thisco~ ineided'with the lifting of certain quarantine restrlcti6ns on MaItese shipping and with the granting of the long-awaited privileges to Maltese shippers under the Navig:ation Acts. Basing our evidence on the ntimberof incoming ships;tb theisland,it would appear that commercial activity in ports began toiricrease from about c 1827. Although the change was not spectacular- charges for depurationl3.ndother port dues were stm higher in Malta than ,at other porls15- the tranSit trade seemed to have picked up after a long perlodof stagnation. With regards to the carrying trade of Maltese-owned vessels; it seems that Maltese owners WBre losing much of this traffic to competitor's. We knowthat the duties paid by Maltese ship-owners on the transfer of ves­sels:had L fallenfromabout£M5,OOO as a total in 1815 to a mere£MlOO £n 1823. Because of ::rdverse conditions, it· seems, fewer vessels werechangirig hands. The services of locaHy-owned vessels were less in demand, and this

13. J. Blow-Williams, B1-itish. Commercial Policy and Trade Exparnsion (1972), p.87. 14. Ibid., p.88. 15. PonsoIlby to Murray 16/9/1829, C.O. 158/64.

244 ARTHUR G. ClLAiRE

was also true, as far as the grain carrying trade was concerned, of a later period. .

Part of the trouble can be traced back to the commercial treaties which Britain compacted with other states. For instance, the Sicilians were allow­ed to engage in the grain oarrying trade of the Maltese as a result of a treaty which Britain and Naples signed in 1816. Twelve years later, of the 500 or sO ships engaged in this activity only about 48 were Maltese-owned. 16 This same treaty also !allowed the Neapolitans to extract ,heavy port dues from Maltese ship-owners with the result that the latter found themselves at a disadvan­tage in Neapolitan territories from which grain was supplied. Reciprocity trea­ies, as they were known, aimed at the exchange of privileges between coun­tries in the interest of trade. In Malta's case, however, they represented a to­tal disregard for local commercial aspirations. Others were to follow. In the early thirties, treaties with France, Austri:a and Greece allowed signatOries to operate directly from Maltese ports. 17 These treaties, however, were not without compensations. First of all, they promoted freer trade; secondly, while they interfered with the locai carrying trade, they aided entrepot be·· sides giving local mariners the opportunity of employment on foreign ships. By the end of the 1830s, mariners formed a large part of the island's mercan­tile community. There were some 16,880 individuals, representing about 3,370 families, depending on the mercantile marine for their livelihood. 18 How many of these actually served on locally-owned shins is difficult to measure, but the number of mariners and their families is an indication of the impor­tance of this sector to the economy. Anything which affected their earnings was bound to have many side-effects.

Godechot tells us that there were other circumstances aggravating Malta's economy. From 1817 to the 1840s he says, the purchasing power of many potential customers in the Mediterranean area itself was stilI rather weak. Further, the introduction of more efficient vessels made it unnecessary for certain types of ships to Clall at Malta for supplies and shelter. 19 !But per­haps there was a more convincing economic reason for by-passing Malta. As ships became larger and therefore more expensive, shippers found it more profitable to carry larger cargoes to and from anyone place, and it is possihle that bigger ships coming to Malta found both outward and inward cargoes in­sufficient for their needs. This also ex.plains 'Nhy local tonnage remained for the major part small. In fact, Maltese vessels rarely exceeded 400 tons, -and there were many small coasting crafts. These small ships had their own pro­blems, of course, especially when it came to the question of security at sea. When in the twenties, Greek privateers interfered with Maltese traders in North African waters, the ~atter could not defend themselves.

16. Lee, op.cit., p.44. 17. Convention on Commerce, C.O. 158/52. 18. Classification of Population (1837), C.O. 158/115. 19. Godechot, op.cit., p.92.

FEA'BURJES OF AN ISLANID ECONOMY 245

To afford some relief to the population in general, the Government under­took to reform the tariffs in the 1830s. Ships of a certain size were given pre­ferential treatment in the payment of port dues. The latter which had com­prised six different charges prior to 1832 - anchorage and lighthouse, water, pilotage, hospital, ballast, and health - were consolidated, and a single rate was applied to tonnage ranging from 6d. e. day for vessels of 25 tons and un­der to 3s. for vessels of 251 tons and over. Furthermore, ships built locally were relieved of all port dues for two years. In addition, duties on transfer of shipping ,and on marine insurance were repealed as was the notorious transit chiarge. Import duties were also modified so that by the mid-thirties over seventy articles destined for local consumption entered duty free. The quar­antine charges, however, were retained as were the duties on imported grain. The latter, which had been based on a sliding scale in 1824, averaged about lOs.3td. until 1832-36 when it averaged lOs 3±d. For the rest of our period, this rate did not vary much.

The reforms had a threefold aim: to lower the cost of living; to encourage the loca~ carrying trade, and to stimuliate the transit trade. Traffic did increase as a result of these measures, but the gains were not large. 20 In years to come, in the fifties and sixties especially, Malta's prosperity was to depend once more on the circumstances of war. Before that time her trading situation did not change much. In one respect trade even suffered a setback, for with the repeal of the Navigation Acts, Malta had less to offer by way of preferen­tial shipping. According to Blow Williams, by the 1850s the older British firms declined and business went to the "native shopkeepers and little traders of all nations". 21 The next half -century was to see little change in the organis­ation of local trade; it remained confined for the most part to these "little traders", though the opening of Suez did bring the island to the Jattention of the larger firms .once more.

According to Montgomery-Martin, direct British expenditure in Malta, excluding military and naval expenses, amounted to DM668,666 in the period 1800 to 1829. 22 Price puts the figure for naval and military expenditure alone at £M125,000 per lannum between 1820 and 1825, rising to over £M200,OQO by 1851. 23 The influx of Sterling was at first too small to have an appreciable effect on the monetary system. In fact, the isl:and's currency in the first two decades of British rule consisted of non-British coins. From the 1820s on­wards, however, Sterling began to assume a greater importance in local cur­rency, so that by 1857 it beoame sole legal tender. But for a long time foreign coins continued to be used in local trading circles. The use of foreign cur­rency in 19th century Malta was one way of overcoming the shortage of local circulating media, it also facilitated the payment for foreign goods. Neverthe-

20. Blow-Williams, op.cit., p.89. 21. Ibid. 22. Montgomery-Martin, op.cit., p.2S0. 23. C.A. Price, Malta and the Maltese (Melbourne. 1954), pp.20S-209.

246 AR11HlUR G. CiLARE

less, it acted against uniformity in the currency system and must have intro­duced an element of uncertainty at the excbanges. But further research is needed to establish the real effect of this system on Ma:lta's internal and 8')(­

ternal trade. At this stage it is worth investigating the responses of Malta's other sec­

tors - industry and agriculture - to the conditions prevailing in the first half-century. The little we know about industry seems to suggest that the leading sector, cotton, was already past its prime by the t:me the British ar­rived. According to Eton, the value of Malta's cotton exports during the Or­der's time in the late 18th century amounted to £M500,000 yearly. 24 We can­not say whether this figure is any\vhel'e near the truth, but there is a strong indication that the industry occupied a very prominent place in the econo­my. 25 E:on suggests that it employed 35,000 men, women and children, al­though this figure is almost certainly an exaggeration. Nevertheless, it does appear to have kept a good part of the rural community occupied for most of the year. In the 19th century, however, conditions changed. Because of the war Malta's chief foreign market, Catalonia, was closed in 1800 and this signalled the beginning of a gradual decline. The industry'S greatest drawback in the following years was that ltremained a domestically-based pursuit, dependent on out-dated machinery, at a time when new conditions of demand and sup­ply were tipping the scale in favour of steam-power and factory production. Then came competition from abroad. Like other textile industries on the con­tinent, the local industry was faced with severe competition from British mills where technology, capital, and know-how combined to produce cotton goods of e'Xceptional quality and at the most competitive 'price. The Maltese pro­duced both yarn and cloth,. but they were inferior to machine-made goods and exporters began to find it difficult to sell in mlrke:s which had already been penetrated by the Lancashire producers. At the same time, local growers were suffering through the import,ation of cheap Egyptian raw cotton which local spinners mixed with the home produce. In the 1820s spun cotton from Malta was allowed into Britain free of duty, while that coming from Britain's own cotton districts was taxed looally a:t the rate of 1 %. These measures, however, did not arrest the decline, and matters were not helped when the tax on cotton was abolished in the late 1830s. By then the value of Maltese cotton had fallen to perhaps less than £M90,000, a figure which is only 18% of Eton's estimate.

A foreboding of the difficult times ahead for cotton had appeared in 1816 in the form of an Anglo-Neapolitan treaty which forbade the importation of Maltese yarn into NeapoHtan territories. This had the effect of lessening the demand for local supplies of cotton, for 'by that time Neapolitan markets had been absorbing large quantities of the Maltese product. But all was not yet lost. -In the twenties and thirties, domestic and foreign demand for local cot-

24. W. Eton, Authentic Materials for a History at Malta (,1802), p.215. 25. Pric~, op.cit., pp.2-5.

FEATURES OF AN ISLAND ECONOMY 247

ton good, albeit much reduced, kept the industry going. Maltese coarse cot­ton, for instance, found a market in the Eastern Mediterranean where it was made into sail-cloth and uniforms. Then there were e~ports to the German States, Tuscany, Venice, the Roman States, Spain, the Ionfan Islands, and North Africa, which included such articles illS coverlets, nankeens, towels and blankets. But behind the apparent resilience of the cotton industry lay a more sinister aspect: long hours of work and starvation wages. This, it seems, was the price it had to pay for survival. In the llate thirties, as many as 7 •. 600 female spinners laboured at their wheel for the meagre wage of a penny a day each, a penny less than their male counterparts. A more fortunate male weaver might earn something like 3id. per day, 26 but even this was low by contemporary standards .. By then the industry was employing around 15,000 persons - beaters, spinners, weavers, dyers 'and weighters - drawn almost entirely from rural areas, and evidence suggests that the working day for. say, a spinner began at 4 a.m. and continued till night-time. Children were employed in great numbers, especially when selasonal factors drove them off the fields .The industry lingered on, but by the late 19th century it had become insignificant. Very little cotton was manufactured then and most of the labour force formerly engaged in cotton had long retired or turned to some other pursuit.

At one time the local administration set out to establish an embryonic sill\: industry on the island. Production of silk was not new in Malta, but it was domestically-based with the raw material being grown and spun in the homes of the workers themselves. In the mid-twenties, an ill-fated finn was set up, backed by British capital, to initiate production on a large scale. It was promised Government support and in fact received a large tract of land on free lease for a sticpulated period. Mulberry trees were then brought over from Naples and the project got under way. By 1827, production reached some 40 lbs. per year, and in the next four years the figure increased tenfold. The future of the whole enterprise did not look too poorly by local standards, even though production methods were out-dated, and had it not been for some ini­tial setbacks, it might have enjoyed a greater success than it actually did. By the late thirties, the fortunes of the industry were low and interest in silk-pro­duction on a l,arge scale evaporated.

One of the reasons why silk failed in Malta was that the basis of the in­dustry was unsound. In an age when capital and technology were paving the way for greater i1actory-production, the local scheme was technically-weak. Whether silk-throwing factories would have made much headway is difficult to say; they would certainly have produced a much better-fn;shed product. But capital for this type of venture was not forthcoming. True, the absence of coal Wlas a major stumbling block, and silk was heavily protected abroad. But British markets would have absorbed the product; in fact, colonial silk-pro­duction was one way of undermining the continental dominance, particularly

26. C.ommission of Enquiry, Austin and Lewis (1837), C.O. 158/115.

248 . ARTHiUR G. OLARE

Nrench, .. over the :product. Duties on imported silk in Britain had at the time been lowered in;favourof the colonies.

::I'he concept .of factory production was not altogether new to the local scene. Houses .of industry and cotton workshops, intended for the relief of the poor •. were based on the factory principle - the housing of workers under one roof. The superiority of factory-production over other· types of production was also realised then. But the reluctance of local capitalists to tie their W'eaJ.th,to,industrial projects which could only pay their way in the future set many difficulties in the way of factory production. Maltese capitalists finan­ced trade; aspired as bankers :.- the Sciclunas· in the thirties, for instance -invested. in property and foreign debentures; engaged in Commerce,' but they lacKedthe drive to diversify their economy. Perhaps the·risk element.was too high . .in. the circumstances of the time, higher than we can imagine at this

,sMge'of research. There were ship-building. and ship-repairing activities, however, on the

islalild;/and alsoa'J?oolof able ship-wrights: But again the industry was small­scale, confined for the major part to the naval· shipyards. The latter increased their output in'the thirties and by 1840: 01' so the shipyard in the Grand Har­bour ha®;ab:outeight slips·forlaying down vessel& of any size. In 1842 alone, a total of nine ships with an aggregate tonnage of 990 tons were buiit local-1~ .. 2hJ1n that year also, Maltese owners had a total of WI vessels of 400 tons and,underlbesidesa number of smaller coasting vessels. Many of these were built .on the island; but the advent of the steamer was destined to thwart lo­cal protluction,

The only other pursuit of note at this time was cigar-manufacturIng. Th.s appears ,to have been viable, and by the 1830s it was employing some 600 workers. Although we do not know anything about their earnings, we know that about 50 million cigars were being ma;nufactured annually with exports contributing around £10,000 to foreign earnings. This sum surpassed the et­port value of other manufactures, namely wrought stone and precious metals takent.ogeilier, by £3,000: Other crafts were insignificant.

The composition of Malta's e~ports. for a good part of our periOd was as follows: cotton goods, cigars, precious ornament:>, wrought stone, sOap, lea­ther, macaroni, some furniture, oranges and salt. These were purely local products. There were also several imported goods entering the re-export trade such as coffee, cocoa, indigo, spices, flax, hemp, silk, toba:cco leaf, W&IC; wood, foreign cottons and wooL In the latter part of the period, tolJaI value of ex­ports, including re-exports, is estimated to/·have been about £300,000 per an­num, while imports, which included' goods meant. for re-export, averaged about £550,000. The chief import item for local consumption was, of course, fobd, but there were also manufactures and raw materials, including colonial prodtlcts, both for home consumption and for re.:export. As time passed,ex­ports of local products were to form an increasingly small part of total for-

27. National Library of Malta (=N.L.M.), Bib!. MS. 388.

FEATURES OF AN ISLAND ECONOMY 249

eign trade, and in the latter decades of the century local consumption of for­eign manufacturers increased appreciably. The vulnerability of Malta's eco­nomy, its increased depedence on commercial pursuits for the payment of basic imports, became even more glaringly obvious in the second half of our period.

One of the main employers of labour during the first half of the 19th century was agriculture. In the 1830salone, it sustained about 5,200 families, or a total of about 26,000 persons. 28 This number is in addition to the 400 or so families. who were returned as landed proprietors in 1837. 29

The main crops grown on the island were wheat and cotton. The type of farming adopted was intensive and essentially a form of spade-husbandry. There was little scope for mechanisation on Maltese fields, and local agricul­ture was very laborious; its returns hardly justified the effort exerted. In these circumstances, yields were low, and all the food grown was never en­ough to feed the entire population for more than a few months in the year. Hence the need to import large quantities of food to the island. But cheap foreign corn depressed farm incomes to the extent that both petty farmers and labourers, who overcrowded the land, were generally poor, and this Wlas true for most of the century. The falling fortunes of cotton pushed earnings fur­ther downwards and the distress in the rural distincts was acute and wide­spread. Overcrowding produced low output per head and many f1armers were nothing more than subsistence farmers. In a much worse condition were the landless labourers who had to support their families, when employment was available after the bleak winter months, on as little as 8d. a day. Cotton spin­ning and weaving augmented their earnings while the going was good, but when cotton declined charity was the only alternative, Farmers made regular use of members of their families, and it was only on the larger farms that outside labour was demanded. The large farms rarely exceeded 30 acres, while the smallest of farms were only about one acre Iarge.

References to the skill of the local farmers !abound in 19th century lit­erature. Indeed, Maltese hushandry required great care and patience. The occasional visitor was struck by the strange appearance of the fields. Many of these formed, as they still do today, a succession of terraces, giving the impression of steps. The manner of forming them involved much skill on the part of cultiViator;When a piece of land was to be reclaimed the rugged surface had first to be broken up and furrowed. Pieces of rock were then inserted in the furrows and soil was laid over the whole surface at a depth of three feet. A rubble wall was then erected around the whole field.

This type of land redamation was heavily engaged in during the French wars. Then Maltese fatmerswere caned upon to produce food not only for the local population but also for the thousands of foreigners - perhaps as many as 30,000, including the entire British contingent - who came to

28. Classification of Population (1837), C.O. 158/115. 29. fbi.d.

250 AR1iHiUR G. OLAR:E

Malta fat this time. In common with other sectors, agriculture was prosperous between 1800 and 1813, farm incomes having increased substantially over the years. During this period, the Government bought a total of 807,429 salmeof wheat; 446,063 of which were 10caUy grown. This was in contrast to later years when, in the period 1815 to 1822, the local plOduce totalled only 74,665 salme. In the 1820s and 1830s, wheat grown on the island rarely averaged more than 15,000 salme per annum. During this same period, imports rose to an average of 55,000 saIme per year. 30

The fal:! in locm produce reflects the depressed state of agriculture in the years following the end of the wars. According to one official in the grain de­partment !at the time; rent on Government property in both urban and rural areas...,:.... some 14,000 'acres of cultivated land in the countryside alone - were in arrears by the early twenties, From 1814 to 1824, "the circumstances of the island land the::value of property have been gradually falling, thereby creating difflcriltiesinthe collection of rents ...... During the last two years I have ta'I{en"upwards of 1,006 warrants of seizure of property". 31 The same source goes ori'la; say thatllarmers on Goverlli'l1ent land were subjected to l,200;'seizutes of crops.

Foreigri imports of grain and cotton were clearly bearing heavi'ly on local agrh~ultureonce the booming conditions of the war years had disappeared. In the-i",twenties and thirties. the sitUl3.tion was worse. The value of cotton ex­pOrts'which stood at about £118,000 in 1830 fell to about £86,270 in 1842. 32 This fall in the value of exports also affected farm profits. In the 1830s, these were ridiculously low. According to Davy, the difference in favour of an aver­age cotton farmer, after deducting the costs involved in the cultivation of a cohon' ftel'd from 'the value of its produce. was only the small sum of 8s. 10ld. 33 Of course, returns varied with the size of the field, its rent and the amount of crop grown. High rents and falling t1arm prices, however, did not lead to any spectacular gains ,even in the larger farms. Rent was soine" times as high as £4 lOs. per acre on good soil and this diminished profits even further.

Nothwitstanding the fact that Maltese farms were not mechanised, far· mel'S did requiresoine sort of capital occssionally to payoff their labour force before the gathering of crops. For this purpose, credit was usually available from· the landlords themselves. But the interest was high;· at times rising to 10%. 'and few farmers must have borrowed out of pure enterprise. Fann tools were not even provided on this basis. In fact, labourers not only had to pro­vide their own strength, they also had to furnish their own tools. This was one of the conditions of employment. In some cases, the wage they received was fn 'kind, so precarious was the situation in agriculture.

30. Consumption of Foreign Wheat, C.O. 158/113. See alEo N.L.M., BC/5/26. 31. Greig to Thornton 24/4/1824, C.O. 158/36. 32. Montgomery-Martin, op.cii., p.219. X.L.M., Bibl. MS. 388. 33. Davy, op.cit., p.407.

FEATURES OF AN ISLAND ECONOMY 251

Agriculture completes the picture that we have of the first half of the 19th century, and, as we have seen, the credits on the economic balance sheet were few. The next half century, however, saw some changes in the material well­being of the> nation, sometimes for the better, but the need for a secure econo­mic base remained. From the mid-century onwards, British parsimony sub­sided, and by the 1860s Malta w,as receiving about £450,000 per annum d!rect from Britain. This, together with increased expenditure on local public works, acted ,as a stimulant on the economy and labour was afforded some relief. Wages rose but only a little; in fact, while earnings of Is. or more a day were now common for unskilled work, this rate was to remain more or less un­changed right up to the Fitst vVorld War. In the meantime, however, food prices resumed an upward trend, and the ~ains in wages were offset by the rise in the cost of living. Already in 1846-47 the price of food had suddenly shot up in consequence of a European shortage ,and although prices fell in the next two or three years, they rose again in the early fifties and remained high for lalong time. This gave a fillip to local agriculture, but the gain was small and was reflected mainly in farm wages whkh rose to about lad. per day at this time. It was during this time also that the increase in steamer traffic in the Malta route was enabling the local population to tap new sources of grain supplies in the Eastern Mediterranean.

The 1850s were years of war - Crimea - and increased defence spending. Traffic to the island rose rapidly in the years 1854 to 1856, and once again MaIDa went through the stages of a commercial boom comparable in itsinten­sity with that of the Napoleonic era. But even during this phase of capital growth the economy remained basicaliy the same, and this meant that with the return of peace the weaknesses of the economic system would 'be exposed once more. Nevertheless, during the short period of the boom conditions were very prosperous, at least around the ports. Shipping tonnage which had aver­more than 15,000 salme per annum. During this same period, imports rose to over 1 million tons in 1855. Navy ships brought supplies and military person­nel in their thousands, and in their wake followed the traders. As a result, dockyard and victualling work increased, 34 and the demand for labour soa­red. In these circumstances, incomes took a sharp turn upwards, especially in the harbour trades, and the whole economy benefited. Ma.lta beCiame the sup­ply centre of the Mediterranean, a replica of what it had been forty years be­fore. Food prices rose rapidly during this time but their full effect was not felt owing to the general prosperity.

The end ofhostiIities inevitably reversed the situation. Economic activi­ty in 1856 and 1857 took a downward trend and pulled down wages and pro­fits in the -process. Indeed. survival now depended more and more on expen­diture by the local Government and by the Garrison. The Iate fifties also wit­nessed the increase in the popuIarity of the steam-driven ships and the begin­ning of the decline of the wooden vessel. The Steel Age was coming in and

34. Price, op.cit., p.107.

252 ARTHUR G. GLARE

with it the demand for steel hulls. This signalled the end of Maltese aspir­ations as shipbuilders but it opened new avenues of employment for the local population. The new ships were easy to service and repair, and, more impor­tant, they needed bunkering. The growing size of ships and their coaling re­qUirements led to an extension of the harbour area, and this meant increased employment. Indeed, the enlargement of the dockyard and the construction of la new dry dock and a coaling station served the harbour community well in the early sixties.

Then out of the blue came another brief period of prosperity to the is­land, agriculture being the main beneficiary. Owing to the outbreak of the American civil war the supply of cotton from the South dried up, and this forced buyers to tap other sources of supply. The price of cotton trebled and Maltese farmers, quick to grasp the situation, doubled their cotton acreages to meet the new demand. Throughout the war foreign ships called at Malta for cotton bales and departed fully-laden for Europe and the USA. Needless to say this activity bad an important side-effect in increasing the demand for coaling facilities and other port services. During this time however, the Mal­tese were taking less and less part in the carrying trade, and the number of local mariners engaged in this activity began to fall. One great source of foreign income was slipping away. Nevertheless, Maltese vessels stilI had re­gular communication with Southampton, Marseilles, Constantinople, Sicily, Tunis, Egypt and the Levant. And the tnansit trade appears to have been fair­ly buoyant. 35

The war in America soon came to an end and the cotton boom was over. In the second half of the sixties, rural areas became depressed once more, for now the demand for raw cotton was not justifying the supply. Moreover, there were three years of drought in this period and cholera struck. 36 The result was great distress among the farming community. And although food prices were high, overcrowding on farms depressed earnings. Labourers were compelled to accept less for their efforts and petty farmers could not make ends meet. With cotton in decline, the problem of under-employment came to the fore. The cotton dearth had put local manufacturers at a disadvantage, but when supply became more flexible the local produce Wias not absorbed fully by the local market.

The sixties witnessed the introduction of a steam-driven factory for the production of biscuits, but industrilal development on these lines stilI lay out­side local interests. Commerce was stilI taking the lion's share of capital on the island, and commercial nursuits were further enhanced when, in 1869, the Suez Canal placed Malta in the centre of an increased traffic between the primary producers of the East and the manufacturers of Europe. The econo­mic uplift which this event engendered was of ,a longer duration than previous booms and it was destined to effect a structural change in the economy. In

35. \V. Tallack, Malta under the Phoenicia.n.s, Knights and the English (1861), p.86. 36. The Malta Observer 13/2/1868.

FEATURES OF AN ISLAND ECONOMY 253

the seventies and eighties there was a definite movement of rural labours from traditional agricultural employment into port occup­ations. This was caused by the opportunities which the bunkering activities began to offer. The Suez traffic invested Mediterranean ports like Malta and Aden with a new vitality. They became convenient stopping places for alI ships plying the Mediterranean route to the East, According to Bowen-Jones, "'Not only from the Mediterranean littoral, Australia and the Orient, but also from the Russi!an and Danubian Black Sea ports came the ships which con­verged on the Malta Straits". 37 Malta, in fact, secured -a snug poSition within a widening framework of the international economy. The number of portar­rivals increased consideraby, so that total tonnage grew from about It mil­lion in 1879 to over 5 million in the late 1880s. An important development was the increase of the Black Sea grain trade which, combined with the need of steamers to load with coal, meant that inward and outward cargoes of ves­sels stopping at Malta paid their way. Thus, steamers from northern Europe and beyond caned at Malta to unload coal and to take up Russian grain and raw materials from the East for their return journey, and so side by side with the bunkering trade there developed an import.ant transit trade on the is~and. This state of affairs was to produce new invisible wealth and was mainly responsible for attracting men raway from the fields. It is significant that coal­men were among the highest paid of all unskilled workers at the time.

During this period, however, food prices began to rise, particularly in the seventies, and real wages took a downward slide, but the buoyant conditions created by the new entre pot r3:ctivity raised the level of local consumption. 38

This mirrored perhaps a rise in the living standards of at least that section of the population engaged in commerce. Those of fixed incomes, the civil ser­v,ants for instance, were not so well off in consequence of the reduced purch­asing power of the money. There was, however, an improvement in the earn­ings of those who chose to remain on the fields; the shift of a part of the ru­ral labour force to non-agricultural occupations brought about a new adjust­ment in the supply and demand conditions in the labour market. Food prices fell a liWe in the late 1880s and this, given the stability of money wages at the time, pushed up real wages, so that the Maltese in general were prosper­ous. This development also coincided with increased official spending on the island.

Prosperity was short-lived. The 1890s brought a reversal of fonner trends, as both the grain trade and bunkering activities began to decline. The economy had already felt a jolt in 1887 when cholera visited the island once more and dislocated trade for a time. But the real trouble came in thp. mid-1890s when international demand for grain slowly turned away from Black Sea produce. Moreover, steam-shipping was becoming more and more effi­cient and fuel requirements did not necessitate frequent stops for bunkering.

37, Bowen-Jones, op.cit., p.120. 38. Ibid., p:-119.

254 ARTHUR G. CLARE

As a result, Mediterranean traffic became more direct, and this development enabled other Mediterranean ports, which were not so strategically positioned as Malta had been, to re-establish themselves The late 19th century saw Malta once more struggling for a trade which only exceptional circumstances had brought within its reach. Competition from southern European and North Africa ports set the dock back. for Malt1aand she was faced once more with the prospect of having to rely solely on British defence spending for her in­come. By then her transit trade was becoming increasingly confined to goods destined to, the Middle East, North Africa and Britain; her cotton industry had become almost solely a lace-making trade, and population pressure was ad­ding its weight on the employment problem. It )s significant that the first de­cade or so of the 20th century was to direct the attention of a great numher of Maltese to the safety-valve of emigration to places outside the Mediter­ranean

Maltese emigration in the 19th century has attracted a great deal of in­terest among historians not so much for its success in decreasing population pressure as for its failure to present itself las a lasting solution to the ,problem of over-population. The Maltese, it seems, were reluctant to seek permanent settlement abroad. Those that did emigrate had a definite preference for the Mediterranean littoral, and few went further afield. Moreov,:;r. there was a high rate of returning migrants, so that inward and outward movements sometimes cancelled each other out. There were several attempts .at organis­ed settlements 'abroad, but these had little success. One of the very few suc­cessful settlements was in North Africa where a large Maltese community was to be found, but ventures to places such as Cyprus, the West Indies and Australia, despite greater economic attractions, met with little success in the 19th century. There was a host of economic and non-economic reasons for this phenomenon which lies outside the soope of this essay, but what strike'S us is the fact that the majority of those Maltese who suffered much economic hardships throughout our period dec.lined to take the advantage of the better living standards which the Americans land Austra:lia had to offer.

The opening of the 20th century, however, saw the Maltese in the clutch­es of a dilemma. Population h:td been increasing fairly rapidly since the eight­ies, but since economic opportunities from the nineties onwards were not rising in step, unemployment at the turn of the century was high. This, c.ou~­led with the absence .of ,a developing industrial sector which would have offer­ed eventually an alternative form of employment, meant that the choice for many lay between starving or migrating. For most of the 19th centu'y, rural labour had something to fall back on cotton, even though the returns were 10\\',

and the problem was one of underemployment rather than unemployment. The seventies and eighties had then presented new opportunities in the ports and induced a rural exodus, but when conditions in the early 20th century were unfavourable there was a number of unemployed for whom employment ab­road was the only alternative. For a time in the late nineties and early 20th

FEATURES OF AN ISLAND ECONOMY 251'

century, increased Government spending and imperial requirements guaran­teed work in the harbour area and in public works in general, but from 1905 onwards activity in the naval base slowed down and this meant unemploy­ment for more than four thousand men who went on to fill the already grow­ing army of unemployed. Tension and war in the Meriterranean in the second half of the 19th century - Crimea, the Eastern Question, Fashoda. the South African War - had made necessary the presence of a large British fleet in that area and had enhanced the strategic value of Malta. But in the first de­cade of the 20th century Anglo-German rivalry shifted attention to defence requirments much further north, and this detracted from Malta's naval im­portance. From 1906 to 1914, the problem of what to do with the unemploy­ed was :a constant source of worry to the local administration. But increased expenditure on public works, it seems, was having only a 'limited effect. And it was in these years that significant number of Maltese were beginning to leave Malta's shores for permanent settlement abroad. The 20th century hiad indeed arrived.

From the foregoing one vital fact stands out: that the basic realities of Malta's commerci:al significance in the beginning of the 20th century were much the same as they had been a hundred years before. Except in times of crisis, or during economic developments which Jay outside Malta's OWn sys­tem, the island's dependence on commercial activities and defence spending signified a weak economic structure: one with no indust.rial base ready to for­tify the weaker parts. Had something been done to diversify the economy at an earlier, time, then perhaps a different story would today have been written.

ARTHUR G. CLARE M.Sc. (Econ.) (Lond.). teaches Economics at the New Lyceum, Msida, Malta.